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UK: June inflation down, easing pressure on BOE

Tuesday, July 18, 2017 - 01:55

British inflation unexpectedly slowed last month for the first time since October, dousing expectations among investors that the Bank of England might soon raise interest rates for the first time in a decade. Kate King reports.

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The annual 'upping' on the river Thames a chance to assist any injured swans and monitor a population that's been in sharp decline. But Britain's also trying to nurture its economy back to health Data out on Tuesday showing inflation dropped to 2.6 percent in June, the first slowdown in 8 months. Lower global oil prices thought to be behind the fall. SOUNDBITE (English) CHIEF MARKET ANALYST AT GKFX, JAMES HUGHES, SAYING: "I think that the good thing is we missed that psychological issue of going to 3 percent. I think that would have caused further issues for the markets. We're seeing quite a sell off in the pound on the back of the announcement today of those numbers but still overall I think that is still quite a high number, 2.6 when you consider the size of the U.S. and the eurozone are still below 2 percent." Inflation rose sharply following the UK's decision to leave the European Union That, pushed the value of sterling down, making imports more expensive. June's lower than expected reading saw the pound drop half a percent against the dollar But inflation is still outpacing wage growth, weighing heavily on UK consumers. The Bank of England has been considering a rates rise to offset the damage though the latest figures may ease that pressure. SOUNDBITE (English) CHIEF MARKET ANALYST AT GKFX, JAMES HUGHES, SAYING: "The fact that we have lower stagnant wages and quite high inflation of course causes issues, if you add to that situation as well the fact that we have household debt up at record levels, then there is a growing problem within there." A report from the Centre for London think tank says the capital's housing market is also starting to wobble. Prices in London grew by 3.0 percent, the second-slowest pace among all regions of the United Kingdom and the weakest growth since 2012. Another sign the economy is struggling to get any lift.